Flipping the Script: A CFO's Insight Into Seamless Headcount Planning

Headcount planning is complicated.

Even in the best of times, it creates unique challenges as Finance and People leaders come together to understand company growth and budget constraints, as well as the skills needed to operate within that framework.

What’s more, the uncertainty in the economy and job market only exacerbates the situation.

Finance leaders, in particular, must constantly reconcile budgets with ever-changing headcount plans, all while understanding the larger implications of what each headcount scenario means for the company.

But it doesn’t have to be this way. With the right approach, Finance can partner with People leaders to turn informed headcount planning into a competitive advantage. Below we’ll take a look at the challenges that prevent accurate forecasting and the changes you can make to plan your headcount with confidence.

Want more headcount planning tips and tricks? Check out our guide, designed specifically for Finance teams.

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Why Headcount Planning is Complicated for Finance Teams

The traditional headcount planning method can be a mess: disconnected teams, constantly changing headcount demands, and challenges forecasting costs beyond cash compensation.

And, if you’re aligning headcount plans via emailed spreadsheets – or worse, you’re not collaborating with other teams at all – you’re bound for disaster.

Plain and simple, these factors make it extremely difficult for CFOs to obtain the information they need. Specifically, headcount planning can be a pain for Finance teams due to factors like:

• Misalignment across departments. HR’s top-level headcount plan often looks very different from Finance’s, especially if all your people data is captured manually in spreadsheets. This leads to different expectations, misaligned budgets, and competition for resources.
• Changing plans. Headcount plans are never truly final; they change constantly, and those changes impact budgets and forecasts. Specifically, hiring someone for a role earlier than planned can require additional budget, while hiring someone later than planned can lead to missed growth targets. At the same time, a lack of control around compensation bands can easily lead to teams going off-budget to acquire top talent.
• Lack of a big-picture view. It’s nearly impossible to forecast accurately when you don’t have a pulse on your financial performance, operating costs, and finance-related people data (from everything as big as compensation negotiations to something as small as new hire swag).
• Dirty data. When your spreadsheets belong to various owners and systems, things are bound to get messy. Over at Big.Bear.ai, HR Tech & Analytics Manager Kathryn LaViolette notes that, after the acquisition of multiple companies, they “didn’t have a systematic way of knowing skill sets, collecting resumes, identifying talent goals, and knowing people’s roles and certifications.”

How to Make Headcount Planning a Competitive Advantage

Making headcount planning an ongoing, strategic activity doesn’t have to be complex. In fact, you can even turn headcount planning into a competitive advantage with the right approach: one that’s centralized, automated, and regularly considerate of internal and external changes in the workforce.

In short, flipping the script on headcount planning requires increased visibility, collaboration and alignment, and continuous monitoring.

1. Increase Your Visibility

First and foremost, visibility into headcount plans (and the many changes through which they’ll inevitably cycle) is essential.

The best way to ensure this visibility is to take headcount planning out of spreadsheets and move it into a centralized solution, like a people operations platform. Doing so helps companies capture changes across teams and track headcount plan approvals in real-time.

This approach ensures that the right people have immediate access to the most up-to-date information. A people operations platform also provides visibility into the complete picture by sharing details like open roles – including their job descriptions and target hire dates, – budgets, and forecasts.

And along the way, you can easily keep tabs on progress by pulling up data such as open headcount by location, open headcount by department, open roles by base salary, and estimated recruiting costs.

Specifically, Justin Borgman, CEO of Starburst, says that their people operations platform “creates more transparency around the organization, which ensures that teams can work seamlessly together to achieve [their] goals.” The result? Starburst’s revenue team met their headcount planning goals and added millions of dollars to their bottom line.

A modern people operations platform allows you to filter through your people data so you make the best financial and employee decisions.

2. Strengthen Collaboration and Alignment

When your people data is housed in a single platform (and therefore provides a single source of truth), you’re able to make decisions with all teams and employees in mind.

That’s because introducing a centralized solution for headcount planning improves the collaborative process by giving teams the same view of hiring plans.

This collaboration can shed light on hiring dependencies and enable more informed, cross-functional planning to help you meet key business goals. When leadership teams are aligned on a single platform, you’re more likely to:

• Find the information you need. Emily Connery, ChartHop’s former VP of People & Talent, explains: “Data is only as useful as it is accessible. By implementing people analytics technology that consolidates your HR data and optimizes insights through visualizations, everything your team needs to know about your organization is instantly searchable and dynamically surfaced.”
• Turn the headcount planning process into a conversation. Instead of spending your time determining which spreadsheet is the most up-to-date, use it to have cross-functional conversations around your headcount planning needs.
• Ensure your headcount plans match your scope and sequence. Sarah Diegnan, ChartHop VP of Customer Experience, relies on collaboration to know if plans for her own team are on the right track. She says, “My approach starts with visibility into the new business sales targets and plans, then I work backwards to make sure our capacity will match demand.”
• Allocate resources appropriately. Alignment helps inform company growth plans and skills needs, therefore ensuring the right teams receive the right resources in a timely manner. For example, when empowered with accurate information, managers can move faster without worrying that they might overpromise what they can actually deliver.
• Establish accurate reporting. LaViolette notes that everyone has “skin in the game to get [your] reporting right.” Once you establish a set system for collecting data, you’re better able to discover trends and access accurate metrics to inform decisions.

3. Plan Continuously

Finally, headcount planning isn’t a one-and-done exercise. Rather, it is an ongoing effort as company goals, team needs, and external factors change throughout the year.

An early-and-often approach helps ensure that open roles are filled and new hires are onboarded by the time their skills are needed, which of course helps your organization meet customer commitments and growth targets.

Additionally, the teams that regularly evolve their headcount plans – and do so in a highly collaborative way – spot risks early and adjust course accordingly. But future plans aren’t just for expansion or scaling efforts. Smart companies also establish succession plans and contingency plans to ensure planned or unplanned changes cause minimal disruption to the workforce and business.

Of course, for all of these initiatives to work, Finance teams need to be a part of ongoing headcount planning conversations. This will help maintain visibility and manage approvals every step of the way.

If headcount is your organization’s biggest expense, make sure you get it right. When you forecast multiple scenarios that teams can view, you further ensure you’ll make the right decision when it’s time to act.

Flip the Script on Headcount Planning for Your Organization

Traditionally, headcount planning has proven troublesome for CFOs. It’s time to change that.

Instead of planning for weeks on end (with potentially inaccurate data, to boot), look to increase your visibility into planning efforts and align with cross-functional leaders every step of the way. And by introducing the right technology, you’ll have a competitive advantage to drive faster growth, boost collaboration, and increase revenue.

Ready to implement a successful headcount planning strategy? Read our 5 step checklist to help your organization sustain expansion or scale successfully.